Jim Cramer is Hot on Coffee Stocks, Sees Caribou (CBOU) as 'Great Speculative Play'
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CNBC's Jim Cramer commented on Mad Money, on June 29, that as shares of Starbucks (Nasdaq: SBUX) and Peet's Coffee & Tea (Nasdaq: PEET) reach all new highs, and shares of Green Mountain Coffee (Nasdaq: GMCR) neared its 52-week high, the valuation benchmark for coffee stocks may move higher.
"These hyper-caffeinated stocks are so hot they're scalding," Cramer said.
Dunkin Donuts announced that it will be releasing its IPO next month and Cramer believes that this new will drive up the demand and interest in the coffee segment.
Cramer first began getting behind shares of Starbucks back in July of 2009 and thinks that it is still a cheap stock under $40. Since July of 2009 the stock has increased over 129 percent and he believes that there is more potential for growth.
The really growth story for SBUX is in the Asian market, Cramer notes. The company currently has 400 stores in midland China and expects to near quadrupedal it to 1,500 by 2015. Starbucks also plans on doubling the number of stores it currently has in Korea.
Green Mountain's single cup brewing business only accounted for 2 percent of the coffee market in 2008, but has now risen into the low teens. With the company's Keurig in up to 9 percent of home in America, he believes that the product is not a "flash in the pan." In the long-run, GMCR's margins will increase due to strong demand for its K-cups. The company's gross margin increased by 4 percent last quarter to 37.5 percent because of the demand for K-cups.
Carmer believes that shares of GMCR are relatively inexpensive considering that the company is growing earnings by 35 percent.
Shares of Caribou Coffee (Nasdaq: CBOU) are also inexpensive, but the stock is very speculative and volatile. Carmer really likes the company's CEO, Michael Tattersfield, and believes that he will be able to bring growth and demand to it like he did with Lululemon (Nasdaq: LULU).
One stock in the coffee industry that Jim Cramer recommends that investors stay away from is Peet's Coffee and Tea (Nasdaq: PEET). The company's stock is selling at 33x its earnings which is only experiencing a 18 percent growth. This compares to SBUX, which also has 18 percent growth, but only trades at a 22 times multiple.
Since PEET does not have a contract with Green Mountain, Cramer believes that it will be hard for the company to enter into the fastest growing segment in the coffee industry. He also does not like its plan to expand into the consumer packaged coffee business instead of growing in store count.
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"These hyper-caffeinated stocks are so hot they're scalding," Cramer said.
Dunkin Donuts announced that it will be releasing its IPO next month and Cramer believes that this new will drive up the demand and interest in the coffee segment.
Cramer first began getting behind shares of Starbucks back in July of 2009 and thinks that it is still a cheap stock under $40. Since July of 2009 the stock has increased over 129 percent and he believes that there is more potential for growth.
The really growth story for SBUX is in the Asian market, Cramer notes. The company currently has 400 stores in midland China and expects to near quadrupedal it to 1,500 by 2015. Starbucks also plans on doubling the number of stores it currently has in Korea.
Green Mountain's single cup brewing business only accounted for 2 percent of the coffee market in 2008, but has now risen into the low teens. With the company's Keurig in up to 9 percent of home in America, he believes that the product is not a "flash in the pan." In the long-run, GMCR's margins will increase due to strong demand for its K-cups. The company's gross margin increased by 4 percent last quarter to 37.5 percent because of the demand for K-cups.
Carmer believes that shares of GMCR are relatively inexpensive considering that the company is growing earnings by 35 percent.
Shares of Caribou Coffee (Nasdaq: CBOU) are also inexpensive, but the stock is very speculative and volatile. Carmer really likes the company's CEO, Michael Tattersfield, and believes that he will be able to bring growth and demand to it like he did with Lululemon (Nasdaq: LULU).
One stock in the coffee industry that Jim Cramer recommends that investors stay away from is Peet's Coffee and Tea (Nasdaq: PEET). The company's stock is selling at 33x its earnings which is only experiencing a 18 percent growth. This compares to SBUX, which also has 18 percent growth, but only trades at a 22 times multiple.
Since PEET does not have a contract with Green Mountain, Cramer believes that it will be hard for the company to enter into the fastest growing segment in the coffee industry. He also does not like its plan to expand into the consumer packaged coffee business instead of growing in store count.
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